THE Commissioner General of the Lesotho Revenue Authority (LRA), Thabo Khasipe, has called for robust new approaches to deal with revenue collection challenges after the LRA missed its revenue collection targets by M607.38 million for the 2017/18 financial year.
This is the second year running that the LRA has missed its revenue collection targets after the 2016/17 shortfall of M430.8 million.
Cumulatively, this represents a shortfall of more than M1 billion and unless the slide is addressed, this could undermine the government’s capacity to fund its operations, bankroll development initiatives, balance the national budget as well as access to multilateral financing which is tied to its ability to service loans.
Announcing the LRA’s performance at a recent media briefing in Maseru, Mr Khasipe said the tax authority had remitted M5.989 billion to government, which was marginally lower than the revenue collection target of M6.597 billion.
Mr Khasipe said the LRA was deeply concerned by the continuing failure to meet revenue collection targets which appeared to worsen in the past two years where the targets were missed by 9.2 percent for the 2017/18 financial year, up from 6.4 percent in the 2016/17 financial year.
The only other time that LRA missed its target since its inception in 2004 was in the 2013/14 financial year.
“This says to us that we need to come up with new strategies if we are to address this slide going into the current financial year,” Mr Khasipe said.
“We are eager to turn around this performance in order to restore the organisation’s former glory.”
Mr Khasipe cited the poor state of the country’s economy and non-compliance on the part of tax payers as the leading factors behind the LRA’s failure to meet its revenue collection targets. He said they were currently 30 court cases that had been filed against non-complaint taxpayers.
“We are the first point of call that bears the brunt of any changes in the economic performance of the country,” Mr Khasipe said.
Mr Khasipe recently told our sister Lesotho Times publication said while that the LRA’s failure to meet its targets could also be attributed to external factors that included the slowdown of the South African economy and the consequent decline in Lesotho’s share of revenue from the Southern African Customs Union (SACU).
SACU is one of the world’s oldest customs union and it consists of Botswana, Lesotho, Namibia, South Africa, and Swaziland.
Speaking on SACU, Mr Khasipe said, “Our economy has not been so robust in recent years due to factors including a slow South African economy and a drop in revenue from SACU”.
“Last year, we saw an interesting feature where our domestic tax-collection exceeded SACU revenue.”
This, he added, reflected how SACU revenue was becoming “of less significance to Lesotho,” thereby placing a heavy responsibility on domestic tax collection.
“We only have one option, which is to increase local revenue, otherwise the government is going to encounter serious challenges, including significant underfunding of some sectors and challenges in accessing multilateral financing due to a drop in our capacity to service loans,”? he said.
The LRA has already introduced the Voluntary Disclosure Programme (VDP) and Simplified Businesses Tax (SBT) as part of the new measures aimed at not only enhancing revenue collection but also building trust and loyalty between the LRA and the taxpayers.
The VDP which was launched in February this year, opened a window of opportunity for all errant businesses and individuals to visit the authority’s offices and amicably address their tax obligations. Those who comply voluntarily will be spared the 200 percent penalty charges.
“The VDP is one of our initiatives that reflects our strategic shift. It gives our clients an opportunity to work through all their tax issues with us. Whether they had overstated their expenses and understated their incomes strategically or by mistake, they can come to us to begin on a new path,” Mr Khasipe said in an interview with our sister Lesotho Times publication.
He added that the initiatives aimed at fostering mutual relations with all clients also created a moral authority on the LRA to apply punitive measures such as penalties and prosecution of those who chose to remain outside the tax net.
Mr Khasipe also said they had begun a countrywide process of engaging corporate tax payers through roadshows in a bid to understand them and get them to contribute more than the 15 percent they were currently contributing to tax revenue.
For his part, Finance Minister, Moeketsi Majoro told the Sunday Express that the government had to reduce spending in some departments during the third quarter of 2017/18 financial year.
“We decided not to spend anymore just to ensure that we are able to pay our bills until the end of the financial year,” Dr Majoro said.
Dr Majoro also said in February this year that Lesotho’s overall fiscal position remained weak for most of 2017/18 and the resultant deficit was being financed through domestic borrowing.